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WPP Set to Spread its Wings in SA

In a bid to extend its footprint in South Africa, Ogilvy & Mather, a wholly owned subsidiary of premier global communications company WPP plc (WPPGY), acquired a majority stake in mobile marketing company, Strike Media Proprietary Limited, for an undisclosed amount.

Strike Media is one of the leading full service mobile marketing companies in South Africa, offering customized mobile campaigns and value added services to several best-known organizations in the country. In addition to traditional services such as bulk messaging, the company provides consulting, mobile content, and mobile marketing campaigns for customer research and analysis along with mobile payment methods.

With increased penetration and access to mobile technology, mobile has fast become a mainstream media and marketing communication tool across the world and has reportedly become the seventh mass media. Consequently, corporate organizations are increasingly utilizing mobile media for mass marketing initiatives to promote their brands.

Post-acquisition, Strike Media will operate as a separate company but will be a part of Ogilvy & Mather. With 8,000 digital specialists, Ogilvy & Mather is one of the largest marketing communications companies in the world with industry-leading units in various disciplines such as advertising; public relations and public affairs; branding and identity; shopper and retail marketing; direct, digital, promotion and relationship marketing; consulting, research and analytics capabilities; branded content and entertainment; and specialist communications.

With Strike Media on board, WPP will be able to extend its product portfolio and gain a footprint in the faster-growing sectors like digital, data, and application of technology. Over the next five-year period, WPP expects digital revenues to account for 35%-40% of its total revenue. In 2013, the company expects its digital revenues to exceed $6 billion, representing over 33% of its total revenue.

However, WPP should remain wary of tough competition from other players in the market such as Clear Channel Outdoor Holdings Inc. (CCO), Publicis Groupe SA (PUBGY), and AirMedia Group Inc. (AMCN). WPP currently has a Zacks Rank #3 (Hold).